Unqualified accountants

Unqualified Accountants

Joe and Jane Bloggs are not allowed to call themselves social workers, unless they are qualified and regulated as social workers.  If they misrepresent themselves as social workers they can be prosecuted and fined £5,000.  Nor could they claim to be solicitors or barristers, or even podiatrists.  Yet they can claim to be accountants, with no qualifications or basic competence to do the job.

ACCA members have repeatedly expressed their unhappiness at what they see as unfair competition from unqualified accountants, not least because they often have to clear up problems caused by unqualified competitors.  The issue has come to a head this year with the CCAB issuing a warning that unqualifieds represent a serious threat to money laundering controls.  Yet the latest moves by the European Commission to open up the professions to greater competition are putting pressure on EU member states to go in the opposite direction by relaxing some existing restrictions.

Ten ACCA Practitioners’ Network events held across the UK this year discussed the problems of unqualifieds.  At a lunch in Leeds, members complained they were losing clients to unqualifieds who were quoting “ridiculous” fees.  One ex-HMRC inspector offered to do tax returns for two people with, between them, five investment properties and four part-time jobs for a total of £100.   Small practices in London see unqualifieds as low fee charging competition – particularly for self-assessment tax returns – in part because they are usually not VAT-registered.

Several network events heard complaints about the poor quality of work done by unqualifieds.  One member at the Nottingham event reported that when he took over the practice of a retiring unqualified accountant he found the standard of work had been “dreadful”. Many clients had underpaid tax and none had realised their old accountant was not qualified.  The legitimate profession is being given a bad name by unqualified ‘accountants’, complained some members.

Ian Critten FCCA, who trades in Cambridge as Ian Critten Accountancy Ltd, explains: “Over the last 18 months I have taken over several clients from unqualified accountants.  The problems were not so much with the technical work they have done.  It is more about them not handing over the books and records.  Some unqualifieds have just gone missing.  I had one or two clients over the last 18 months who said their accountant isn’t in business any more, or who isn’t answering their phone.

“Someone who had used an unqualified phoned me because the bank would not accept the figures from an unqualified accountant for a bank loan.  They were astonished that I said I needed to redo the work.  They paid £200 to £300 to the existing accountant and I would need £1,000 to do it – and I realised immediately that I would not be able to agree the figures [provided by the unqualified].   People don’t realise there is a cost penalty for going for the cheapest prices.

“We certainly know the Revenue targets the accounts of people who use unqualifieds.  For a lot of people it doesn’t affect the tax they pay, but for some it means they miss out on tax advice on capital gains and inheritance tax.  I have an arrangement with another chartered accountant to take over clients if my plane crashes and I don’t come back from holiday.  One of the missing unqualified accountants had died and then all the office papers got dumped by the landlord.  There is a lack of back-up.”

Russell Geary FCCA, who trades in Derbyshire as RDG Accounting, says: “I have had very bad experiences with unqualifieds.  Some of them flout the principles of professionalism.  But they charge the same as qualifieds and they call themselves ‘accountants’.  That annoys me because I work hard, play by the rules and make the necessary payments.

“I don’t think all unqualified accountants are bad.  There are some good ones doing a good job.  But some are making more money than qualifieds, because they don’t pay insurance or professional fees.   We must write to unqualified accountants when we take over one of their clients.  Probably 80% of the time we do not get a reply.  There is certain data they hold that we need and we might have to go to HMRC for it.

“There is no one we can complain to.  If they were ACCA registered accountants we could complain to ACCA and ask them to intervene.  We recently had a problem with a firm of chartered accountants and ACCA drafted a letter for us and that sorted out the problem.  We have a client that HMRC is prosecuting for fraud, which is very, very serious.  He had an unqualified acting for him.  Some of the things coming out are scary.  If he was qualified he would lose his professional membership.  But this guy can just walk away without any recourse.”

ACCA and the other chartered accountancy bodies provide support to members and ensure standards are met.  These standards are not only about quality, but also ensure members have arrangements with other practitioners if they die or are otherwise unable to continue to practice.  Institutions’ members must also be adequately insured, including for professional indemnity.  Many unqualified do not have similar levels of insurance – and may not be insured at all.

The Consultative Committee of Accountancy Bodies has even more serious concerns about some unqualifieds.  A recent CCAB report, ‘Coming out in the wash’, warned that money launderers are likely to use unqualified accountants to assist them.  The CCAB called for more control of unregulated accountants as part of efforts to shore up anti-money laundering legislation.

Anthony Harbinson FCCA, chair of the CCAB, explains: “Policy makers and regulators have to address the risks posed by unqualified accountants who are perceived as less effective in detecting and guarding against this kind of financial crime.”

Research by Ireland’s accounting bodies found there are 120 unqualified accountants in the country.  Aidan Clifford, advisory services manager for ACCA Ireland, says: “There was one ‘accountant’ who stole money from his clients and, as soon as he got out of jail, he stole from his clients again.  We want to protect the public by requiring the automatic registration of accountants.”   Experience in Ireland finds that some unqualifieds are guilty of repeated breaches not just of professional good practice, but also of criminal law. (See box.)

The Irish government failed to accede to requests from ACCA and the other professional bodies to include protection in the new Companies Consolidation and Reform Bill.  However, Ireland’s jobs and enterprise minister Richard Bruton has now instructed officials to conduct a consultation next year with interested parties, including ACCA, on the possibility of introducing some form of protection of the name.

One of the reasons quoted by the Irish government for not protecting the term previously was the failure of the UK government to adopt similar measures. The Department for Business, Innovation and Skills, which is responsible for regulation in the UK, did not respond to our requests for information on why it had apparently rejected or ignored proposals to control and regulate the term accountant.

While the Irish government is at least willing to consider protection, it is would be swimming against the European tide if it legislated on this.  Those EU member states that do provide protection for the term accountant may now repeal that protection under pressure from the European Commission.   A spokeswoman for the Commission says it wants “to remove the restrictions limiting the access to certain professions”, adding that “regulating access to a profession could be considered as a restriction on a fundamental freedom, guaranteed by the Treaty [of Rome, establishing the European Community] that must be justified.”

An EU paper from last year (Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee on evaluating national regulations on access to professions) reported that several surveys found no correlation between the regulation of professions and the quality of service provided by them.  Instead, it suggested, restriction of access to professions raises costs to clients and limits consumer choice.  As a result, member states have been “invited” by the Commission to review professional regulation “with a view to eliminating unjustified restrictions or barriers”.

So despite the evidence of harm caused by unqualified accountants, it seems there is little political support for regulation or restriction in use of the title.  There seems little chance of it happening in the UK for the foreseeable future.


The case of Ignatius Forde

A so-called ‘accountant’, Ignatius Forde of Carlow Town in Ireland, was jailed in 2001 on charges of defrauding the Revenue Commissioners of IR£270,000 from 1994 onwards through a company he set-up to manipulate tax reliefs for the film industry.  Forde was convicted in 2001 and 2009 of fraudulently converting cheques, defrauding one client of €79,276 that was due to the Revenue Commissioners.  In 2007 Forde was prosecuted by Ireland’s Office of the Director of Corporate Enforcement on charges of conducting audits without being qualified to do so.  Last year Forde was given a three year jail term, suspended for six years, after conviction for fraud and buying and exporting beer without a licence.  This year Forde was charged on 50 counts of auditing companies without being qualified to do so, of which a sample 13 charges went to court.  The judge imposed a €1,000 fine without triggering the suspended prison sentence.


Sarah Hathaway

Sarah Hathaway, head of ACCA UK, says: “We are saying to the general public and the business community that we are championing the benefits of using qualified accountants.  We have been doing that over the last few years.

“One of the issues is regulation – that we have a code of ethics and we regulate as a professional body.  If something goes wrong, there is recourse for the client.  The other issue is about competence and quality.  The unqualified accountant is not required to be up-to-date on the technical side of being an accountant.  It’s about risk.  We are saying that you are taking a risk if you are using an unqualified accountant.

“Members tell us that are being asked if they are qualified.  Not across the board, but it does happen.  So we know that it is an issue for clients.

“We want to work together – members and ACCA – to put the message across.  Members can use the ACCA logo, the brand, and use that to say that they are ACCA qualified.  They can use the opportunity to tell clients that they are qualified and have that badge of integrity.”

Paul Gosling

1 thought on “Unqualified accountants”

  1. LaToya matthews

    Has anyone ever been able to do something about hiring unqualified accountants?
    And have they succeeded?

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